Greek Tax Hikes Backfire As Tax Revenues Plunge 16%

There was some hope that Greece, which for the past few months was desperately trying to show it has a primary surplus when in fact it was merely shoving unpaid bills under the rug, was at least getting its runaway deficit situation under control. This, despite what many sensible people pointed out was the return of nearly daily strikes, which meant zero government revenue as zero taxes could be levied on zero wages. Turns out the sensible people were again right, and the Greek and European propaganda machine has failed once more as the Greek Finance Ministry just reported that despite big tax hikes demanded as part of austerity measures by international lenders, tax revenues fell precipitously in January, with the Greek Finance Ministry reporting a 16 percent decrease from a year earlier, and a loss of 775 million euros, or $1.05 billion in one month.

This means that the government took in only €4.05 billion ($5.47 billion) in tax revenues in January, far short of its target of €4.36 billion ($5.89 billion), a $420 million shortfall in one month, which also came during an annual holiday sales period for shops who are bleeding customers and shutting down by the thousands.

It is all downhill from here as the feedback loop of more spending cuts is activated to offset declining revenues, leading to even less revenue, and culminating with the complete collapse of Greek society.

If Greece fails to meet revenue targets it will trigger a correction clause at the end of each quarter of the year, setting off automatic spending cuts except for pensions and salaries. That could further harm already-depleted government services.

Finance Ministry officials attributed the decline in tax revenues to the drop in consumption, as revenues from Value Added Tax (VAT) shrank by 15 percent, while those from the special consumption taxes were also lower. Greeks hammered by big pay cuts, tax hikes and slashed pensions have cut back spending even on essential items, with supermarket sales falling 500 million euros, ($6763 million) in 2012.

The numbers could have been worse as the government gained revenues from doubled property taxes and big hikes in income taxes that have hit most Greeks except for tax cheats who continue to largely escape sacrifice or prosecution.

This may well be the last straw for a "fixed" Greek crisis - "the only options left for the government is to collect from tax evaders and improve tax collections, although tax hikes have led to many more Greeks trying to hide their income, statistics showed." Of course, nobody could have predicted that too.

The Troika and other EU countries offered to help Greece collect taxes but little interest has been shown by the government. The new General Secretary for State Revenues, Haris Theoharis, plans to meet directors of the 36 biggest tax offices in the country to study ways of collecting expired debts, according to proposals by the country’s creditors and the European Commission’s Task Force for Greece.

Does this mean that paying hedge funds at 50 cents on the dollar on their worthless Greek bonds was not the best idea?

But, but the spin was that if only all Greek debt was converted into zero coupon perpetuals all would be well?

Or maybe they were just referring to Deutsche Bank. As for the Greek population, where everyone is simply doing what they can to survive, which certainly does not mean paying taxes to the government, it is every man, woman and child for themselves.

Finally, one can only hope that the US will learn something from what this terminal collapse of a socialist utopia looks like. Sadly, it won't.

Frankly ~ I'm kind of on hold at the moment... I really think all this recent hype is going to blow over... [Hope so ~ at least]... But to me, running around like a chicken with your head cut off is like chasing a market TOP... When shit gets like that, I'd prefer to stand back [or look for ideas that nobody else thought of]...

- S[actually does]HTF ~ There will be plenty of shit lying around [for free] from dead people who didn't know what TF they were doing...

- Otherwise ~ 'go back to basics' & figure out what you need to manufacture the stuff yourself... Set yourself up with raw materials & components...

~~~

It's the same as with everything else...

Hang around the dumpster bin of any big box retailer, or Home Depot & you can scrounge yourself up just about anything you need to build anything...

Dipshits ~ I was driving y a HomeDepot awhile back after a snowstorm & saw people walking out with 40 pound bags of 'de-icer' which they were paying $10 a bag for... In the corner of this same ginormous parking lot was a pile of salt... So I walk in & buy 2.5 gallon paint buckets for $2.60 a piece, walk out, & scoop myself up 80 pounds of salt... Take it home, dump it in a container & now I have still have two extra paint buckets...

I should just rinse them off & return them, but they're always handy...

Fuck man ~ It gets worse... I happened to catch a small segment of the ESPN show "OTL" [Outside the Lines"]... The subject was on "knock off replica merchandise"...

They were interviewing this guy who hadno problems buying Chinese knock-offs of 49ers jerseys for $30 [which were almost 100% identical to "official NFL merchandise"] & wereby the same thing costs $200...

So at one point they cut to some twit spokesperson for the NFL to ask her about the situation...

Sternly ~ she starts off by saying "Well, first of all, it HURTS THE ECONOMY"!...

I almost had an anuerysm... No bitch!... It hurts the NFL... Yeah ~ so I save $170 [to presumably spend elsewhere, in many diffrent places] & I'm hurting the economy... Not to mention the fact that whatever the hell you buy, it's all being manufactured from slaves in China...

I don't know how that "." go in there... What I meant to type was (2) "5" gallon buckets... [which you can just about do anything with, from shovel, to measure, to mix soap in, to collect rainwater, to seal dry goods in, to fill with soil & grow food (just drill a couple of holes about an inch or two from the bottom for drainage)]... They'll even hold your nickle collection...

A relative of mine who lives in Andy Kuomo's People's Republic of New York says rifle ammo is starting to be seen on the shelves again, but trickling in very limited quantities/calibers. Most retailers have imposed individual buying limits of 2-9 boxes/day (depending on store). Internet ammo to PRNY is now prohibited.

BTW - cameo with Ben Stein: everyone's favorite pre-subprime mortgage denier. I remeber a long pre-2008 article by Stein (with real math) about how even if the bottom dropped out, the effects on our economy would be neglegible.

"A tax increasing in a percentage ratio to capital will give a much larger revenue than the present individual or property tax, which is useful to us now for the sole reason that it excites trouble and discontent among the goyim."

-Protocol #20

"Although economist Arthur Laffer,[3] does not claim to have invented the Laffer curve concept (Laffer, 2004), it was popularized with policy-makers following an afternoon meeting with Nixon/Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974 in which he reportedly sketched the curve on a napkin to illustrate his argument.[4]"

"The term "Laffer curve" was coined by Jude Wanniski who was also present. The basic concept was not new; Laffer himself says he learned it from Ibn Khaldun and John Maynard Keynes.[5]"

-Wikipedia

So, if tax revenues approach zero at both 0% rates and 100% rates, what if it is not only the rates which are variable, but the incomes? I mean, if I am not making any money, then tax rates aren't going to be 35% for me any more, and revenues are going to approach zero.

Dear Leader keeps telling us that more taxes are healthy for the US economy. Dear Leader keeps telling us that more redistributionist spending is good for the US economy. Dear Leader keeps telling us that more federal debt is good for the US economy.

Got some 90% silver, too. PMs have value if things don't completely collapse, and some level of civility remains.

I just don't believe the collapse is going to be orderly or civilized. When the EBT cards and Obamaphones stop working, all hell is going to break out - the parasites are going to become dangerously predatory.

And no, I'm not really prepared for that environment. (And, I really hope I'm wrong.)

Don't forget a source of potable water or a way to filter non-potable water.

I think a lot of folks (not specifically directed at you, BA) forget the water. Food, ammo and silver are important - but if you run out of water in a few days it could be all for naught. I like to go with a rule of thumb of 3 gal per person per day. So a family of 4(with 2 small kids) I like to say 10 gal/day for ever how long you think the brown stuff will stay in the fan...

Relating to water, many people fail to consider the water and energy requirements of preparing their stored food. Basic staples (beans, wheat) require significant cooking, which involves extra water and lots of energy, before being eaten.

There is no way that any country could survive on taxation alone when you have the free shit brigade to contend with. It might been a different story if we had a simpler tax code, and got rid of the corporate welfare but that will never happen.

Control must be maintained. Look at North Korea. How do you think their tax revenues have been since 1992? But who cares? The people are all slaves, and cannibalize their own children. North Korea- dystopia now, and coming soon to Obamaland.

And yet Greeks would still probably vote to stay in the Euro. I feel for their suffering but if they were smart, all they would need to do is storm their parliament and drag their leaders out before ripping up these debt contracts. However, they don't. I just don't if I should feel sorry for them or not when i consider this.

March 2013, Troika meetings with the Greek finance ministry breakdown after the agenda is hijacked by a side discussion into wether the Troika Inspectors know of any cash plastering or electrical work.

A major misconception(and a fault in the Laffer curve theory) is that the State(aka. Politicians) always prefer to maximize tax income vs tax rates, thus adhering to the Laffer curve.

This is not true in the real world, the State(aka. Politicians) always try to maximize their power not their income thus they don't care at all about the Laffer curve. Simply said they will prefer a bigger piece of a smaller pie, than a smaller piece of a bigger pie even if that means nominally smaller revenues.

Instead of trying to adjust taxes to maximize state profits they adjust taxes to find the breaking point of the economy, as we can see many European states are near or even over that breaking point.

It is all downhill from here as the feedback loop of more spending cuts is activated to offset declining revenues, leading to even less revenue,...

I don't know about that. This implies that government spending begets GDP at a greater rate than would otherwise be the case if the money to fund that government spending stayed in the private sector.

The only ways to resolve this insolvency at this point are bankruptcy followed by government restructuring or the wholesale seizure (more forcefully than mere taxation) of private wealth by the government.

I wonder if obama got up this morning and read this....and a look of suprise might have come across his face...as he sees in real life that raising taxes does not always mean more revenue......he will find out soon enough....watch teh CBO rejigger their numbers.....now you will have to look on page 2,015 of the NYTimes...but it will be there...in small print under the hooker ads.....

I keep posting this, and I keep getting red arrows for it .... Scheiß egal.

I, as long as everyone else should have absolutely zero sympathy for the Greeks. They vote over and over again to stay in the Euro, which is exactly what is killing their economy and destroying their standard of living. Until they start to vote en masse to ditch the Euro, and their votes are in turn suppressed I have no sympathy for them what-so-ever and neither should anyone of you.

Yeah, like the drachma will make a big difference, especially as the currency wars heat up.

Sure, dump the Euro and have all the rest of the Europeans pissed at you as well as the U.S.A., not to mention the evil banksters who run the global show. The media will get their marching orders and scapegoat Greece as the cause of financial calamity. All that, while having to contend with an historical and dangerous enemy/neighbor in Turkey. The banksters won't have to sic the U.S. military on tiny Greece to teach them a lesson: Turkey will be happy to do the job, with gleeful malice. They'll carve up Greece with the phony Macedonian Skopje along with Albania and Bulgaria taking a piece of the action. Hey, as a bonus maybe they'll bring back the system of jannisaries and demand only the non-raped Christian virgins convert to Islam.

The financial titans may now profitably privatize what was public, make splendid acquisitions at fire sale prices, pay rock bottom wages, and have government act as their endless debt collector for their otherwise worthless loans and scams.

^^^ this. People need to get off the laffer curve BS. The laffer curve is a political too used to obfuscate. You could tax people nothing, and if you monetary system is based on the creation of debt money with interest attached, you will end up with collapse.

This episode points out the value of a democracy with voluntary cooperation. If the sheeple believe in the system, they'll pay up with little effort by the government. How effective would tax collection be if armed, foreign officials were introduced into the environment?

You can talk about the army going around seizing assets and human rights, but that is simply killing the golden goose.

Time to face the basic fact that any loanshark knows: you can't "juice" a "mark", if you kill him.

The solution is at once simple and elegant - it will become the Patriotic duty of all Greeks (and their legal obligation with new laws) that Greeks must pay taxes every year in the sum equal to the highest tax they paid in the previous ten years, whether or not they are employed.

This will work as a wonderful motivation for lazy Greeks to go out and look for a job, and at the same time works very well for Greek Bankers and Politicians who through careful effort, skill and sacrifice avoided paying any taxes in the previous ten years!

Austerity works right? Even if you hate Krugman you guys need to give him this (which you wont, too busy trying to find Greece from the map while shining your new patch of hollow-points).

Lets face it, Greece had no place in eurozone, its a backwards country reliant of tourism and they never have paid their debts. Usually when beer turns to wine (or uzo) things get more and more fucked up.

But what has EU learned about the whole debacle? Own currency is needed for countries that cant compete? EU doesnt work? Austerity in recession doesnt work (Ireland, Spain, UK, Greece etc...)?

Well I according to my buddy who have the "pleasure" of working in this unholy bureaucracy tells me that the MEPs think there is too little EU and it needs it own taxes...

Read an article in the SF Chronical last week that quoted a wealthy man of about 70 in a follow-up to something done during the election where they raised CA income tax. He said yes, he had done exactly what he said he was going to do: close his private equity firm, reduce his income and travel. For him 50% combined income tax was the tipping point. The loss of course is not just the tax from his income but the new jobs his firm was venture funding. Many others will simply leave the state. Hell if you like CA, establish your residence elsewhere and have extended visits.

Campell's Soup was a staple of the Sacramento economy for decades. It recently closed down. When the local news guy asked one of the state legislators why he thought the soup company shut down, his reason was that people don't really eat canned soup anymore.

The politicians haven't a clue what they are doing here. They are just egomaniacs. Wannabe elites.

The ones really in charge of what is going on are not stupid. This is all on purpose. A middle class beat down of epic proportions. And YES, it will come here. Everyone will be shaking their heads wondering why we repeat the same mistakes over and over. The reason, quite simply, is that they are NOT mistakes. They are part of a bigger program being played out. It is that damn simple. There is no other plausible explanation.

The majority of these guys have no new ideas and are void of a game plan to oppose Obama. No one seems to having the guiding principals of fiscal conservatives needed and/or are afraid to step into the limelight and take on the slave master.

Is scary. The lack of all of this is really tell tale. Just like the lack of prosectution of those who perpetrated financial crimes. It's a free-for-all now. Shit is accelerating and every effort is being made to cleverly obscure and delay the impact. My fear is that in doing so, it will all hit at once without any appreciable warning. Just "WHAM" and the lights go out... proverbially (and maybe for real).

Let made some analysis on the tax revenue from consumption. One thing that some people do not realize reading though all this info, is that the Greek people have alternative(s). They can slow their consumption, produce most of whatever they need on their own, or as most of northern Greeks do, go on shopping in the southern parts of their EU, comparatively, inconceivably less leveraged, neighbor Bulgaria. This is what happens when you have an over-leveraged ( over debt-ed ) system, where the people have REAL choices to paying more taxes on the consumption, whatever they may be. In this case slowing their consumption or directing their consumption to the neighboring a lot less taxed state.

Or, you just buy stuff under the table for cash or barter. That's what VAT does best- create a black market.

If black market prices must be higher in nomlnal terms (ie, compared to base prices in legitimate markets, minus VAT), they must also be cheaper than prices including VAT, or the black market can't exist.

If one adds in the advantage of a black market in that cash transactions are also untaxable re. incomes derived, then black markets benefit everyone. The buyer gets goods priced at least somewhat cheaper than price+VAT in the stores, and the seller, since she doesn't have to pay income tax on her gains, can sell at only a slight markup over the legitiamte base price.

In some science class we had this dish with bacteria in it. For a few days we kept putting some sugar solution in it. The bacteria kept growing and expanding. Finally we got tired of feeding it. All the bacteria died.

I'm still around though.

Aside: Personally I'd willingly let all the sponges whose life depends on government gifts to die, if that means I get to live free!